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Financial Accounting Test1

This document contains 6 questions regarding financial accounting concepts and assignments. Question 1 asks to define business entities and describe different types, and explain prepayments, accrual expenses, short-term investments, and long-term investments. Question 2 provides trial balance data and asks to prepare the trial balance. Question 3 defines concepts like the money measurement, business entity, going concern, realization, and materiality concepts. It also asks about users of accounting information and their needs.

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musa moses
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89 views

Financial Accounting Test1

This document contains 6 questions regarding financial accounting concepts and assignments. Question 1 asks to define business entities and describe different types, and explain prepayments, accrual expenses, short-term investments, and long-term investments. Question 2 provides trial balance data and asks to prepare the trial balance. Question 3 defines concepts like the money measurement, business entity, going concern, realization, and materiality concepts. It also asks about users of accounting information and their needs.

Uploaded by

musa moses
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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MANSFIELD UNVERSITY

Financial Accounting Assignment

Question 1
(a) Define a business entity and explain the difference type of business entities. ( 13marks)

b) Explain the following

i) Prepayments (3marks)

ii) Accrual expenses (3marks)

iii) short term investment (3marks)

iv) long term investment(3marks)

Question 2
Prepare Trial Balance as on 31.03.2012 from the following balances of M. RUTH

Drawings 74,800

Purchases. 295,700

Stock (1.04.2011) 30,000

Bills receivable 52,500

Capital 250,000

Furniture 33,000

Discount allowed 950

Sales 335,350

Rent 72,500

Freight 3,500
Printing charges 1,500

Sundry creditors 75,000

Insurance 2,700

Sundry expenses 21,000

Discount received 1,000

Bank loan 120,000

Stock (31.03.2012) 17,000

Income tax 9,500

Machinery 215,400

Bills payable 31,700

Question 3
(a) Explain each of the following concepts
i) Money measurement concept (3marks)
ii) Business Entity Concepts (3marks)
iii) Going Concern Concept(3marks)
iv) Realisation Concept(3marks)
v) Materiality Concept(3marks)
(b) State and explain the users of accounting information and what are their information
needs(10marks)

Question 4
BR started a business on 1 May and, during the first month, entered into the following

 transactions: 

1 May BR starts business as a sole proprietor with K20,000 in  cash 
2 May Pays K15,000 cash into a business bank account
4 May Purchases goods on credit from JM for K2,000
6 May Purchases goods from ERD on credit for K3,000
7 May Pays wages in cash K60
10 May Pays rent by cheque K80
12 May Sells goods for cash K210
16 May Buys furniture for K1,500 paying by cheque
19 May Sells goods on credit to SP for K580
22 May Buys goods for cash K3,900 24 May Buys fittings for cash K600,
Pays carriage outwards costs by cheque K25 25 May Pays wages by cash K110
Sells goods for cash K430 27 May Receives part payment from SP of K330 by cheque,
Pays carriage inwards costs by cheque K20

28 May Pays advertising by cheque K25 Sells goods for cash K890
29 May Sells goods on credit to KM for K8,090
30 May Withdraws K100 cash for his personal use

Required: 

I. Prepare ledger account entries to record the transactions. 

Question 5

The financial year of Jacobs Co ended on 31 may 2012


At 1 june 2011 the company owned motor vehicles costing K124,000 which has been
depreciated by a total of K88,000.

On 1 August 2011 Jacobs Co sold motor vehicle, which had cost K54,000 and which had been
depreciated by K49,000 for K3,900 and purchased new motor vehicle costing K71,000.

It is the policy of Holloway to depreciate its motor vehicles at 35% per annum using the reducing
balance method. A full years depreciation is charged on all motor vehicles in use at the end of
each year. No depreciation is charged for the year on assets disposed of during that year.
Required

A) The motor vehicles account


B) The allowance for depreciation: motor vehicles account
C) The assets disposal account

Question 6
At the year end of T & K Co, an imbalance in the list of account balances was revealed which
results in the creation of a suspense account with a credit balance of K1.040.

Investigations revealed the following errors.

I. A sale of goods on credit for K1,000 has been omitted from the sales account.
II. Delivery and installation costs of K240 on a new item of plant had been recorded as a
revenue expense
III. Cash discount of K150 on paying a creditor, JW, had been taken, even though the
payment was made outside the time limit.
IV. Inventory of stationery at the end of the period of K240 had been igored
V. A purchase of raw material of K350 has been recorded in the purchases account as K850.
VI. The purchases returns day book included a sales credit note for K230 which had been
entered correctly in the accounting of the debtor concerned, but included with purchase
returns in the general ledger
Required
a) Prepare journal entries to correct each of the above errors. Narratives are not
required
b) Open a suspense account and show the crrections to be made
c) Prior to the discovery of the error, T&K Co gross profit for the year was calculated at
K35,750 and the net profit for the year at K18,500. Calculate the revised gross and
net profit figures after the correction of the error.

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